Of trade and trucks

“As we advocate a new strategy on exports and challenge the new isolationism, we must also make it clear that much more than trade is at stake. At stake is America's leadership in the world-our geopolitical relationships and our national security.” –Thomas J. Donohue, president and CEO, U.S. Chamber of Commerce

It’s no secret that trade and trucking are inextricably linked; you simply cannot have one without the other. For commerce to occur, it needs some form of transportation to move goods bought and sold, imported and exported, from manufacturer to distributor to consumer – and trucks provide the lion’s share of that movement in the U.S., handling some 71% of overall tonnage.

The flip side is also true – if there is no commerce, there is almost no need for trucks (outside of the needs of fire and rescue services, military operations, etc.) Trucks were created to serve the engine of commerce, because these machines could do so tirelessly and with greater efficiency, first in comparison with horses, then surpassing even the mighty locomotive with its flexible mobility.

Now, however, trucks and trade are finding themselves pitted against one another on our southern border with Mexico as the fiery debate continues – rising to yet another fever pitch – over whether to allow Mexican trucks to operate on U.S. roads in the name of more efficient commerce. The arguments also involve a wide range of topics – from equipment safety and driver linguistic capability, to the raging battle Mexico is fighting against a whole host of criminal enterprises on its border with the U.S., most them involving drug cartels.

At the end of the day, though, the issue of Mexican trucks is one at its heart grounded in trade and jobs. Would allowing Mexican carriers to operate on U.S. roads result in American job losses? That is the big concern.

The U.S. Chamber of Commerce claims such American job losses are occurring now because the border is NOT open to Mexican trucks, as the border closure has resulted in a growing trade war between Mexico and the U.S. This claim is part of a larger battle against what the group feels is a growing trend in “isolationist thinking” in the U.S. on the subject of trade.

“In the eye of this storm, the first instinct is to turn inward and to protect the remaining businesses and jobs,” noted Thomas J. Donohue, president and CEO of the U.S. Chamber in a speech this week at the Michigan chamber’s 2009 Future Forum & Annual Meeting. “But that's an approach that simply won't work. In a new, more competitive global economy, we need to expand our engagement with the world – not shrink it.”

The study makes several big claims – ones that not everyone agrees with, but are worth thinking about nonetheless.

First, the group said the U.S. could suffer a net loss of more than 380,000 jobs and $40 billion in lost export sales if it fails to implement its pending trade agreements with Colombia and Korea.

Second, "Buy American" rules slipped into the $787 billion American Recovery and Reinvestment Act of 2009 – commonly referred to as the “stimulus bill” – would only create a limited number of U.S. jobs, which could quickly evaporate if other countries implement "buy national" policies in their own stimulus programs. If foreign governments lock U.S. companies out of just one percent of this total spending, the net U.S. job loss could surpass 170,000, the U.S. Chamber said.

Finally, the study found that the U.S. failure to implement the Mexican cross-border trucking provisions of the North American Free Trade Agreement [NAFTA] has resulted in $2.2 billion in higher costs for goods, $2.6 billion in lost U.S. exports, and more than 25,000 lost jobs for American workers.

"The U.S. has refused to keep its word to Mexico," said Donohue. "How can we call on other countries to meet their obligations under trade agreements if we refuse to meet our own?"

However, a lot of groups – especially those represent unionized workers in the U.S. – don’t see it that way at all. "The Chamber gets it exactly wrong on several levels," said James P. Hoffa (at right), general president of the International Brotherhood of Teamsters. "First, it's NAFTA that cost at least a million U.S. jobs. Second, Mexico imposed tariffs that are manifestly excessive, and that's a violation of trade rules. It's outrageous to blame the U.S. government for Mexico's disregard for U.S. highway safety standards as well as trade agreements."

The trade dispute with Mexico stems from the cancelling of the nearly two-year old cross-border trucking program established by the Federal Motor Carrier Safety Administration in early March this year via an addendum to appropriations bill by Sen. Byron Dorgan (D-ND).

“None of the funds appropriated may be used, directly or indirectly, to establish, implement, continue, promote, or in any way permit a cross-border motor carrier demonstration program to allow Mexican-domiciled motor carriers to operate beyond the commercial zones along the international border between the United States and Mexico,” the words of his addendum stated.

Yet after President Barack Obama – who, along with Vice President Joe Biden, opposed FMCSA’s Mexican truck program while serving in the Senate – signed the measure, Mexico went on the trade warpath, slapping higher tariffs totaling $2.4 billion on over 90 goods its imported from the U.S. on everything from strawberries to Christmas trees.

“This is not about the safety of American roads and American drivers. This is protectionism,” said Arturo Sarukhan, Mexico's ambassador to the U.S., in late March.

That got President Obama (at left) backpedaling pretty fast. “With respect to trade, Mexico is one of our largest trading partners,” said the President in a joint appearance with Mexico’s President Felipe Calderon in April.

“The amount of commerce that flows back and forth creates wealth in Mexico and it creates wealth in the U.S. I have said repeatedly that I'm in favor of free trade," President Obama noted. "I know that there has been some concern about a provision that was placed in our stimulus package related to Mexican trucking. That wasn't a provision that my administration introduced, and I said at the time that we need to fix this because the last thing we want to do at a time when the global economy is contracting and trade is shrinking is to resort to protectionist measures.”

To date, though, the trade war continues. The U.S. recently slapped retaliatory tariffs on goods from Mexico, estimated to be $427 million. Though U.S. Secretary of Transportation Ray LaHood laid the groundwork for restating the Mexican truck program in May, nothing has occurred since then, leaving the issue twisting in the breeze.

And it’s exactly this type of “dawdling” on trade issues that, in the words of the U.S. Chamber’s Donohue, the U.S. simply cannot afford to do.

“Today, nearly half of the world economy is centered in the Asia-Pacific region. Fierce new competitors and markets of great opportunity – from China to India to Brazil – are rapidly emerging,” said Doinohue (seen here at right). “These developments are not only reshaping global economics, but they are altering geopolitics. Emerging nations are projecting their commercial influence into other spheres – securing capital and the best human talent, making deals for oil and natural resources, and flexing their economic muscle to advance their strategic interests. “

How is the U>S. responding to the new global race for jobs, markets, influence, and leadership? In Donohue’s view, not well, as the country is not stepping up on the worldwide stage as boldly, as vigorously, or as smartly as we must.

“Our nation faces a fundamental choice,” he said. “In a new global economy, and in the midst of a major economic downturn, do we hunker down and turn inward – or do we act boldly to ensure that America is as preeminent in the 21st century as we were in the 20th century?”

That’s a good question – but it’s one that will not be either easy or simple to answer when it comes to dealing with trade and trucks.